Become a better investor
Lesson in Course: Ambition reviews (beginner, 5min )
Part 4 of Use stock at work
When we are granted RSAs from the company, we pay for them outright; however, the shares still need to vest.
Vesting for RSAs works a little differently than RSUs or stock options. Rather than receiving the shares on the vesting date, we already own them. The vesting schedule reduces the amount the company can buy back from us.
For RSUs, The IRS considers the entire value of the RSU on the vesting date taxable, which can create the problem of building up a large tax bill that will be due when the shares vest.
More investors are catching on to the returns they can make by investing in a company before it's publicly listed, creating opportunities for liquidity events to happen before a company chooses to go public.
As an employee, we might be approached directly by another investor, without approval from the company, to purchase our shares. We also have the right to look for a buyer ourselves and negotiate a fair price.
For companies, liquidity events allow shareholders to sell their stock and cash out. There are a few different kinds of liquidity events and the majority requires a company to be public.